ECONOMIC ORDER MODEL (nQ,R,T): CONSTANT LEAD TIMES AND EXPONENTIAL BACKORDER COSTS

Abstract

At each periodic review, the quantity ordered is multiple of Q, nQ and the reorder level is R, The backorder cost Cβ(t) is b1 e b2 t. The expected backorder cost is derived by obtaining the difference between the expected backorder cost at time t+l and t+l+T. In this paper demand is assumed to follow a normal distribution. Some basic mathematics of the properties of a normal distribution is introduced to simplify the derivation of the equations. The first order derivatives of the backorder costs are given..